Greek crisis prompts SBI to delay $1.5-billion bond sale

Those planning large borrowings are concerned about pricing of instruments

Uncertainty over Greece, as well as the rest of the euro zone, has prompted State Bank of India (SBI), the country's largest lender, to delay plans for a $1.5-billion bond offering.

Confirming the move, a senior SBI official said the bank was waiting for stability to return to the market. "At present, there is uncertainty over pricing issues," he said.

The bank was planning to begin road shows for fund raising abroad and had taken global merchant bankers Citi, Barclays and Standard Chartered on board for the proposed offering. In April, the bank had raised $1.25 billion through five-year bonds, priced at 205 basis points over US treasuries.

Another SBI executive said following the unfolding of events in Greece, the volatile markets had made decisions on pricing challenging. A foreign bank executive involved in fund syndication said those planning large borrowings were concerned about pricing of instruments, adding they were awaiting stability in markets.

SBI, which has been aggressive on fund raising, had earlier talked about mobilising Rs 15,000 crore and raising additional equity capital through a follow-on public issue, a rights issue or private placement, including a possible qualified institutional placement.

SBI executives said the crisis in Grece would have little impact on the bank, as it did not have any direct exposure on this front. As for clients, the bank has been very conservative about keeping positions open (euro currency exposure).

According to Thomson Reuters data, primary bond offerings from Indian issuers stood at $27.1 billion in the first half of this year, 23.5 per cent more than in the year-ago period.

Indian issuers tapping the offshore dollar-denominated bond markets raised $6.4 billion, 3.8 per cent lower than in the year-ago period. Reliance Industries raised $1.9 billion from three dollar bond offerings, while Bharti Airtel raised $993.0 million in June.

Axis Bank topped the rankings for India-issued bond underwriting in the first half of this year, with proceeds of $3.6 billion from 84 deals; it accounted for 13.1 per cent of the market share.